The School-Pak Story, Part 2

Don't know how this was missed but apparently it was never posted. Here's part 2 of our story.

Crayola became our first company to deal with.

Like most big companies that get approached by a start-up, Crayola wouldn’t give us credit. But they did come up with an interesting program.

All we had to do was send them $2,500 to start our account. (That wasn’t real easy. You see, our total start-up cost was $500. So coming up with 5 times that amount was taking a bit of a stretch.)

As we had things sent to us, Crayola would deduct that from our account until we were almost at zero. Then, another $2,500 was needed.

It’s time to step back a little at this point. In 1993, Terri was working as a group leader in the outpatient department of St. Joseph’s hospital. Her schedule had her working second shift 2 days a week for one week and then 3 days the following week. It didn’t bring in much income but it provided health insurance.

My only source of income came from an interesting place. In 1986 I became a partner in a small company, Station WVCR. We had a vending machine for VHS tapes. We were the forerunner of the Red Box, just 25 years early!

We ended up closing the business as Blockbuster became the major force for renting tapes. We couldn’t afford to keep up with the number of new release copies they provided and eventually had to close our doors.

Our main benefactor, Bill Kesselman, was the financial loser, close to $500,000. Yet, as I’ll write about in the future, he became one of the best mentors I’ve ever had.

I kept the tapes and started a small service, placing films in grocery stores (without the vending machine) and shared in the rental profits. That was now my way of earning a living.

It was tough but we held together for another 5 years before Terri could come on full time. In the meantime, I was the “missionary”, traveling across SE Wisconsin, talking to principals and parent groups about School-Pak.

It was a new concept then and it was pretty difficult getting schools to sign up. Yet a lot did and now we had another problem.

School-Pak outgrew our house!

To be continued.

Unethical Business Practice

In 1991, I founded School-Pak with the core beliefs of providing quality products, a high level of  customer service and a fair price for school supplies.

I have been unable over the years to match the sale prices of items offered by WalMart, Target, Kmart, etc., as School-Pak does not carry underwear and socks, the items that these stores want you to buy. They offer the sale prices on school supplies as a loss leader to their store.

I understand that sales model. It works for them and they will continue to do that. They don’t offer the same level of customer service and convenience that School-Pak presents.

However, I can no longer stay silent about the practices of Educational Products (EPI). I have found that our pricing has shown to be lower than theirs in many cases. EPI, however, will state that they will discount any lower bid than theirs by 3% in order to get the business.

I believe that to be the highest level of unethical business practice.

Consider the following:

You, or someone in your family, is applying for a job. The interviewer asks you what salary you need. After offering your number, another applicant, not having the same skills as you, responds that they will take 3% less than you. And you lose the job.

Or worse. Someone comes into your employment and says they'll do your job for 3% less. And you lose your job.

I can’t change the mindset of people who believe that the lowest price offsets business ethics. I can only believe that most people will do the right thing.

Terri Schulist

Founder, School-Pak, Inc

The Beginnings of School-Pak, Part 1

I had mentioned on our facebook page that we were entering our 23^rd year. Boy, that time went fast.

Someone messaged me asking how everything began. So I thought I’d share a little bit about our story.

It was August of 1991 when Terri went shopping for our son, Nick’s, school supplies. Like so many people, she grabbed that list and went off to the store. We didn’t have WalMart’s in Milwaukee back then so the first destination was Target. She couldn’t find everything on the list so the next stop was K-Mart. Not good. Office Depot? Office Max? Walgreens? It didn’t matter. No one carried all the things needed.

Back in the 90’s, there was an organization named SHOPA that catered to all the major suppliers. They were the ones who selected colors for the upcoming sales year. Purple colored folders were available in 1990 but not in 1991.

Terri followed a mother and daughter from store to store looking for that elusive purple folder. Finally, the mother grabbed a folder from the shelf and a Sharpie. She wrote “purple” on the folder and gave it to her daughter with the instruction, “She can take it up with me”, referring to the teacher.

Of course, the little girl was in tears realizing she was the only kid in the school without a purple folder. Which actually wasn’t the case in the end.

So Terri came home, sat down at the kitchen table and said, “There has to be a better way for families to enjoy summer than getting into arguments at the store.” And so, School-Pak took root.

We spoke to our son’s principal at St. Catherine’s school in Milwaukee about providing a kit with everything on the teachers’ lists. She agreed to let us give it a try and also let us use her name with some other Archdiocesan schools.

That first year we worked with 7 schools. We still provide kits to St. Catherine’s, St. Monica’s, St. Jude’s, St. Mary Visitation and Holy Family. Unfortunately the other 2 closed, as so many Catholic schools do in large cities.

Buying product was the real issue. If we bought it at retail, we couldn’t make any money selling it to the parents. So we started searching for sources. Our other son, Jason, made contact with a school supply company in Skokie, IL, Swenson’s School Supplies. Karen Swenson was kind enough to help us get started by providing items at a very minimum markup.

We also started shopping the sales at the stores, but we knew that couldn’t work for long. We needed to find a way to buy direct from manufacturers. Our first contact was with Crayola and it was an interesting start.

To be continued

Gene

Time for a little personal pride.

Just welcomed Justin Tate (JT) Schulist to the world about an hour ago. Nick (our son) and his wife Mel added Justin around 4:28pm this afternoon.

This makes the 4th grandchild, 3 boys and 1 girl.

Time sure does go fast. I remember when Jason and Nick were born and now I'm the old guy. Pretty cool.

My real hope is that they can navigate these kids through life, teaching them to be as great as they are and showering them with love. Times are pretty hard to raise children now. They both seem very capable and will do a great job.

This probably isn't "Blog material", but, I'm pretty damn proud!

Made in the US?

Wow, the campaigning is just about over. Hopefully everyone voted.

The big topic this year has been the economy and how slow the recovery has been. Unemployment numbers have remained relatively high throughout the summer and hopefully, whoever wins, there are plans to get people back to work.

No big news that jobs being sent overseas has hurt our workers, the GDP, tax collections, etc. Tax breaks for sending jobs abroad has made it attractive to American companies. And it’s somewhat understandable.

Lowering the cost of labor increases profits which increases stock prices which increases individual IRAs and 401Ks. It’s a vicious circle. No one wants their savings plans to lose money but they also want to be able to work so that they can contribute to their plans.

We recently ran a survey with our customers asking if they would be willing to accept a price that reflects the use of products made in the USA.

The results were surprising. A large percentage (67%) responded that they could accept a higher price. That was the good news.

We then wanted to find out if some product names could be substituted with a generic. For example, Kleenex shows up on a number of lists but the schools and teachers use “Kleenex” as a generic term for tissues.

We found that most parents felt that Kleenex, Post-its and Ziploc were brands that could be replaced with a generic product.

But don’t touch my Fiskars, Elmers or Crayola.

Here’s the rub. While Crayola manufactures some items in their Easton, PA plant, most of their products are produced in foreign countries. The same goes with Elmers and Crayola.

So while people want to support American jobs the most popular brands aren’t being made here.

We’re happy to say that, except for these requested brands, most of the items we offer are made in the USA. Maybe it will change someday. One can only hope that companies based here start looking at ways to bring those jobs back to help our economy.

President Obama/Romney, look at the incentives to send jobs overseas and give our unemployed a level playing field.

Binder Problems

Mitt Romney isn’t the only person having to deal with binder issues.

When we first started School-Pak, we made every effort to provide high quality, durable binders. Then came the competition, offering packs with economy binders, much lower in cost.

Naturally, we wanted to keep our customers and attract new ones so we began substituting the durable binders with economy ones. They didn’t hold up very well. They actually fell apart relatively quick, within a few weeks of school.

So off we were to find “the” binder. Our first attempt was with Samsill. Not only did they make a durable binder but they could do different colors for us. As a matter fact, one of our schools sent us their binder and we sent it on to Samsill. They began making binders for us based on the specs from the binder we sent them. Unfortunately they didn’t make the grade either, even though it was their highest quality.

Next up was Cardinal brand. They weren’t able to send us binders by color so we had to buy the assortment and have them de-assorted into colors. Once again there was failure.

Our next stop was Avery. They were able to do a lot for us and also included Boxtops for Education stickers on each binder. We thought things went well until we began getting phone calls from a few schools saying that they were having a problem with them.

We knew that it was the same Avery Binder and our price ($6.82) was lower than what Office Max was charging ($7.29), Target (their site says that the price varies by store. ??? What’s with this? Shouldn’t it be the same regardless of where you shop?), or Walmart ($8.88).

So here we are, ready to go into another school year but unsure of what to do. Why isn’t there a durable binder that holds up?

We finally figured out the problem.

All the binders we used were high quality and durable binders…if they were used in an office setting. None of them can hold up to being carried, dropped, opened, closed, etc., 5 to 10 times a day. They aren’t made for STUDENTS! THEY’RE MADE FOR PEOPLE WHO GO TO THEM ONLY A FEW TIMES A WEEK.

We’ve tried to explain to the manufacturers that “durable” isn’t “durable” in the hands of a student who uses it multiple times a day. They don’t seem to get it.  I’m not sure what they need to make it out of…concrete? I just know that 13 year olds are going to have a different way of using a binder than businesses.

It would be wonderful if teachers were aware of this. Maybe they wouldn’t be asking for something doomed to failure.

As for Mitt, he never said if it was a 1”, 2”, 3”, 4” or 5” binder.  :)

Competition: Fair or Unfair?

Running a business is difficult.

First come up with an idea. Then see if it’s accepted.

Next find suppliers for your product. Realize you’ll be doing almost everything out of your home for awhile but know that, at some time, you’ll need an office and warehouse space.

Secure both and find out you now need to pay utilities, phone service, security service. That’s not too bad except you can’t grow much because the work is too much for two people.

So you start looking for help, paying social security taxes, medicare taxes, unemployment taxes, workman’s compensation insurance plus insurance for all the stock you now have.

Finally you’re ready to go. Except you have to raise your prices to cover the cost of rent and employees. OK, that works and you’re still in the ballpark. Except you need to hire more help and you need to get more sales. So you work out an advertising budget and realize that you won’t be making much of a living on what’s left. But you make it work and find yourself growing.

After 5 years you can finally start taking a salary.

Then: BAM!

You find that the 25¢ ruler you’ve been putting in the kits are on sale at Office Max for a penny. What’s worse? They’ve copied your order blanks (so did Walmart, Target and Office Depot), removed your copyright information, and posted them in their store as a convenience to their customers.

Variations on this theme have happened for the last 15 years. An expensive lawyer could probably help you but you can’t afford it. Not unless you want to go another 5 years without getting paid. So you march into the store, complain to the manager and take all the copies with you. Finally the copying stops. But not the pricing problem.

In Wisconsin, we have an “Unfair Sales Act” or “minimum markup law” that prohibits the retail sale of merchandise at a price that is below the seller’s “cost”. As a rule, everything must be marked up by 6%. It also applies to “loss leader” items, those things that make you come into the store to buy cheap crayons as they know you’ll also buy underwear, socks, etc.

So here’s what I did this year. I contacted the Department of Agriculture, Trade and Consumer Protection to file complaints against Target and Shopko. Crayola Markers were being sold by Shopko for 99 cents. The cost is over $1.75. I waited for a response and was finally sent a letter on Sept 17^th, stating that Target was not guilty of any infractions since “…we have documentation that shows other businesses at or below the alleged retail price. The “meeting competition defense” is an allowable exception.

Sure glad they don’t check drunk driving. I guess if everyone on the road is drunk the “meeting competition defense” would exempt anyone for a fine. Or, how about the prostitutes that work the streets? If there are two of them would they be exempt since they’re the “meeting competition defense”?

Apparently the date of the infraction is the deal breaker. If no one else is advertising a low price, you break the law. That’s what happened to Shopko who was found in violation of 4 product prices.  Of course there wasn’t any penalty. Just a warning not to do it again. I’m sure that it’s as effective with companies as it is with kids.

Just want it to be fair.